Part I reviewed the definitions of strategy offered by Alfred D. Chandler Jr., Kenneth R. Andrews, Michael E. Porter, Thomas J. Peters and Robert H. Waterman Jr., Richard N. Foster, Andrew S. Grove, and Henry Mintzberg, who are generally thought to be (among) the preeminent strategists of the last 50 years. It then indicated why each, on its own, was not sufficient. Part II looked at the definitions provided by Richard Whittington, Gordon Walker, and Robert Wittman and Matthias P. Reuter and derived not only some generic approaches to strategy, but many of the essential elements that a strategy needs to have. This allowed for the derivation of the following, working, definition of business strategy:

a comprehensive rational plan of action to achieve one or more goals designed to give the organization one or more competitive advantages consistent with the long term sustainable vision of the organization that addresses historical and emerging market patterns, emerging markets and technologies, resource allocations, offensive and defensive actions, organizational and customer cultures, and the people who will make the plan work.

Having this definition is a great start, but it doesn’t provide any insight as to how a business strategy is derived, which is the precursor to a successful supply chain strategy. This post will look at some of the different proposals out there and then, in Part IV, look at harmonizing them into a workable approach that can be used to get started.

The first thing one notices when the “strategy guides”, that purport to address formulation and execution, are examined is that most define strategy as that which addresses a set of critical issues or requirements and do not provide a framework for its construction.

For example, Lawrence Hrebiniak, author of Making Strategy Work: Leading Effective Execution and Change and the corresponding article on “Making Strategy Work: Overcoming the Obstacles to Effective Execution” in the Ivey Business Journal lists the following critical issues that must be addressed by an effectively formulated strategy:

• Having an Implementation Model to Guide Execution Thoughts and Actions
• Remembering that Sound Strategy Comes First
• Structure is Important to Successful Implementation
• Care Must be Taken to Translate Strategic Objectives into Short-term Operating Metrics
• Clear Responsibility and Accountability are a Must for Effective Execution
• Reward the Right Things – Use Incentives to Support Execution Processes and Outcomes
• Ensure the Development of Appropriate Capabilities and Managerial Skills to Make Strategy Work
• Focus on Managing Change

Then there are W. Chan Kim and Renee Mauborgne who, in Blue Ocean Strategy, indicate that the goal is to make the competition irrelevant and state that the formulation of a “blue ocean strategy” involves

• the reconstruction of market boundaries,
• a focus on the big picture, not the numbers,
• a reach beyond existing demand, and
• getting the strategic sequence right.

In “Be Different or be Dead”, Roy Osing indicates that construction of a BE DIFFERENT strategy involves the following eight steps, which are intermixed questions and actions that also seem to be devoid of a unifying framework:

• How big does management want the organization to be? Set growth and financial goals first.
• Who should the organization serve? Choose target customers that will satisfy big goals.
• How will the organization win? Construct the ‘only’ statement to separate the organization from the pack.
• Create the strategic game plan. It should make a good strategy elevator speech.
• Define the critical objectives to achieve 80% of the strategic game plan.
• Assign accountability for each objective.
• Be insane about execution.
• Monitor, review, learn, and adjust during execution.

And Gary Neilson, Karla Martin, Elizabeth Powers take a similar approach in “The Secrets to Successful Strategy Execution” in the Harvard Business review. Basically, they harp on the importance of a plan that:

• clarifies decision rights,
• designs information flows,
• aligns motivators, and
• makes structural changes.

Basically, the only “frameworks” out there are Porter’s Five Force Analysis, Strategy Mapping, Value Stream Mapping, the Blue Ocean Strategy Framework, MACS (Market-Activated Corporate Strategy Framework) [McKinsey], the McKinsey 7-S Strategy Framework, and Scenario Planning. But none of these are general purpose frameworks that can be used ubiquitously. Porter’s five forces only indicate whether or not a strategy has a chance of succeeding, not how to go about formulating it. Strategy mapping, which grew out of Kaplan’s and Norton’s work on the Balanced Scorecard, is very performance and metric centred, which is useless for entirely new initiatives. Value stream mapping is highly customized to (lean) manufacturing. The Blue Ocean Strategy doesn’t apply if creating an entirely new market isn’t feasible. The MACS framework is based heavily on financial planning, which may not be feasible early on in the strategy formulation process. The 7-S Strategy framework has been highly customized for IT and Scenario Planning and helps in the identification of scenarios that need to be addressed, but provides little in the way of resolutions.

In other words, most of what’s out there provides a good checklist, but little provides a good framework that a strategy formulation effort can be based upon. Part IV will address a method for harmonizing this insight and provide a starting point.

Share This on Linked In

Part I reviewed the definitions of strategy offered by Alfred D. Chandler Jr., Kenneth R. Andrews, Michael E. Porter, Thomas J. Peters and Robert H. Waterman Jr., Richard N. Foster, Andrew S. Grove, and Henry Mintzberg, who are generally thought to be (among) the preeminent strategists of the last 50 years. It also indicated why each, on its own, was not sufficient. This post will look at some other definitions of strategy and try and arrive at a definition that can be applied to a business, and its supply chain. Then Part III will discuss how an organization might go about getting there.

Most of the basic definitions seem to mirror the Wikipedia definition of a plan of action designed to achieve a particular goal, such as the definitions found on InvestorWords and the BNet Business Dictionary. But those aren’t deep enough to be useful.

Richard Whittington wrote a book called What is Strategy — and does it matter. In it, instead of offering just one kind of view on strategy, the book built on four generic approaches to strategy:

• classical: it’s rational planning,
• evolutionary: it’s the discipline of the market,
• processualists: it’s the accommodation of the fallible processes of organizations and markets, and
• systemic: it’s linking with the powers and cultures of the local systems in which the business participates.

In other words, Whittington attempts to convey that strategy is four-point diamond, and that the right strategy is probably somewhere in the intersection, just like the most brilliant diamond is critically angled.

Then there’s Gordon Walker who wrote a book on Modern Competitive Strategy which started off by asking what is strategy and noted that an effective strategy must provide the following benefits:

• economic gain: it matches the market position of the firm to resources and capabilities,
• resource allocation: it insures consistent and self-reinforcing programs can be built and maintained, and
• management and organization: it insures the organizational structure is tied to economic rationales.

In other words, Walker attempts to convey that a strategy is that which enables the firm to succeed in its market(s) in a repeatable and maintainable manner.

And then there’s Robert Wittman and Matthias P. Reuter who wrote a book on Strategic Planning: How to Deliver Maximum Value through Effective Business who also started off by asking what is strategy, which started off by quoting Sun Tzu and noting that Sun Tzu’s three aspects of victory still express the essential elements of strategy today, which are:

• profit potential: which highlights courses of action that will lead to future success,
• value-based orientation: which revolves around an encouraging vision that provides the path for long-term development, and
• competitive advantage and customer advantage: which is essential for the long-term success and survival of the business.

In other words, Wittman and Reuter attempt to convey that a strategy is that which will generate business success.

Tie it all together and see that many of the essential elements of a strategy revolve around:

• actions and goals,
• allocation of resources and policies,
• patterns (identification, incorporation, and manipulation),
• competitive advantages,
• emerging markets and technologies,
• offence and defence,
• rationality and analysis,
• internal and external factors, including market forces,
• sustainable vision, and
• people and cultures.

This allows one to define a business strategy as:

a comprehensive rational plan of action to achieve one or more goals designed to give the organization one or more competitive advantages consistent with the long term sustainable vision of the organization that addresses historical and emerging market patterns, emerging markets and technologies, resource allocations, offensive and defensive actions, organizational and customer cultures, and the people who will make the plan work.

And while this definition may not be perfect^*, unlike most other definitions, it does provide a solid foundation that can be used to determine whether or not a proposed strategy is reasonable and actionable. It provides a basic acid test — if it doesn’t meet these basic requirements, the strategy is not ready for prime time.

However, this only indicates what a strategy is, and says nothing about its derivation. Part III will discuss existing proposals for the definition a business strategy, and, ultimately, a supply chain strategy and indicate where they fall short.

Share This on Linked In

^* but then again, is any definition of strategy perfect? The author hasn’t found one!

While seeking a successful supply chain, chances are that one of the first three things every “consultancy” will mandate is the need for “supply chain strategy”, which must be in-line with the “business strategy”, where strategy is defined, on Wikipedia, as a plan of action designed to achieve a particular goal. But what does it entail? And how is it achieved?

It’s a good question, and one that Walter Kiechel III tried to answer in Seven Chapters of Strategic Wisdom over on Strategy+Business with his shortcut to the big themes in the conversation about corporate strategy. In the article, he offers a review of the best writing on strategy: not books, but seven of the best chapters from books related to the topic which covers the main definitions and arguments put forth by:

• Alfred D. Chandler Jr. in Strategy and Structure: Chapters in the History of the American Industrial Enterprise, 1962
• Kenneth R. Andrews in The Concept of Corporate Strategy, 1971
• Michael E. Porter in Competitive Strategy: Techniques for Analyzing Industries and Competitors, 1980
• Thomas J. Peters and Robert H. Waterman Jr. in In Search of Excellence: Lessons from America’s Best-Run Companies, 1982
• Richard N. Foster in Innovation: The Attacker’s Advantage, 1986
• Andrew S. Grove in Only the Paranoid Survive: How to Exploit the Crisis Points That Challenge Every Company, 1996 and
• Henry Mintzberg in The Rise and Fall of Strategic Planning, 1994.

In essence, these “critical chapters” in strategic history defined strategy as:

• the determination of the basic long-term goals and objectives of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals;
• the pattern of major objectives, purposes or goals and essential policies and plans for achieving those goals, stated in such a way as to define what business the company is in or is to be in and the kind of company it is or is to be;
• that which provides competitive advantage (which, in Porter’s viewpoint, basically boiled down to the pursuance of cost leadership, differentiation, or narrow focus on a geography, territory, or product segment);
• an emergent property that begins with the hand the organization has been dealt and goes from there, with all the existing strengths and weaknesses, setting off in a general direction where the organization runs into reality — including markets, products, and competitors that don’t behave the way the organization expects them to, learn from organizational mistakes, make corrections, and “execute like hell”;
• an exercise in pattern recognition, which is often centred around emerging technology and its “S” curve;
• an attack mentality, even if it means innovating to supplant current organizational technology; and
• a means of getting past the fallacies of predetermination, detachment, formalization, and marketing myopia.

However, a strategy:

• has to indicate how the long-term goals translate into short term actions;
• has to address geography and internationalization;
• could also be differentiated in terms of service, environmental impact, or market definition;
• has to be proactive as well as reactive;
• has to be able to shape patterns as well as recognize them;
• has to be defensive as well as offensive; and
• has to account for the unknown.

Thus, these definitions, on their own, are not a sufficient definition of strategy. So what is? And given a definition, how is a strategy created? Part II will explore some other definitions of strategy and arrive at a working definition of business strategy.

Share This on Linked In